Delhi CM reduces petrol price, makes CNG costlier

Less than a week after the public sector oil companies raised petrol price by Rs. 7.54 to 73.18 a litre in the Capital, the Delhi government plans to bring it down by Rs. 1.26 to Rs. 71.92 a litre.

The government, in its budget proposal for 2012-13, has announced the waiver the 20% value-added tax on the increased price component of Rs. 6.28 a litre and will notify it once the budget is approved in the assembly.

Indian Oil Corporation, the biggest oil PSU, also said on Monday that it would review the petrol prices on June 1, hinting at a Rs. 1.50-to-2 price cut.

The Delhi government, however, levied a 5% value-added tax on compressed natural gas (CNG), hiking the price by about Rs. 1.77 a kg from Rs. 35.45 a kg.

Talking to reporters after her budget speech, Delhi CM Sheila Dikshit, however, said the budget had still not been passed and the government might reconsider the levy of vat on CNG after the debate in the house.

If the government does not roll back the tax, there is a possibility of a fare hike as entire public transport system in the Capital runs on CNG.

There are about 5.5 lakh CNG-run vehicles in Delhi, including private and public transport.

Talking about the VAT waiver, Dikshit said the aim was to give relief to Delhiites.

"We gave relief to the people when there was an increase in the price of diesel last year," said Dikshit, who also holds the finance portfolio.

Meanwhile, the auto-rickshaw and taxi operators' unions have announced strike against the CNG price hike on May 31.

Rajendra Soni of the Bhartiya Mazdoor Sangh that controls auto-rickshaws and taxis in the Capital, said, "The government should either roll back the CNG price hike or should immediately announce increase on auto and taxi fare."

But Dikshit said earlier in her budget speech: "We have continuously forgone VAT on CNG... UP and Haryana are already levying 12.5% and 5% VAT, respectively."